Restructuring Public Utilities for Competition

Public utility industries, once regarded as monolithic monopolies, in fact are made up of many separate activities, many of which can sustain effective competition. Experience shows that introducing competition into these industries leads to enhanced efficiency and greater innovation as well as benefits for consumers such as lower prices, better service and greater variety. But owners of bottleneck facilities are often in a position to restrict or limit the growth of competition. There is a growing realisation that fundamental structural changes are often necessary if the full benefits of competition are to be achieved for users and consumers.

This publication explores the nature and impact of rules which affect the structure of public utility industries. It covers not only the theory behind different forms of separation but also practical experience in a wide variety of countries and sectors. It also contains the new OECD Recommendation on Structural Separation of Regulated Industries, which urges Member countries to consider separating the monopoly and the competitive parts of regulated industries, especially during the process of privatisation or liberalisation.